Adjustment for age

[jeyuhas]

How do you make an adjustment for age in a situation where no similar comparables exist, forcing the use of comparables with 20 or more years differance in age? I stated in my report that an age adjustment lacked support for this property, the reviewer did not agree and stated that a field reviewer was able to make an age adjustment.

 

[Randolph Kinney]

Maybe the field reviewer would be kind enough to tell you how he did it.

However, M & S has a chart and discussion on age-life depreciation. Maybe you could look at the cost approach on each comp and the subject. The sales price minus the land value will give you the depreciated cost of the structure from a market prospective. You should be able to work up something from that.

 

[Terrel L. Shields]

I stated in my report that an age adjustment lacked support for this property, the reviewer did not agree and stated that a field reviewer was able to make an age adjustment.

I would think if you cannot support an age adjustment, then you lack enough market evidence to make any adjustments and the Sales Approach would be severely limited or unapplicable. If I can estimate an effective age or an actual age for the subject and for the comparables, then I can make an age adjustment.

 

[444nutman]

I have seen some areas where the older homes sell for more than the ones that are newer.Older homes have a greater market appeal. Your market tells you what you adjust for age.(not an UW sitting in his desk four states away.) Just because things are different on the grid does not always constitute an adjusment. The problem is an UW see a difference and expects an adjustment and decides not to read my addendum on why I made the decisions I made on the grid. I hope the next time they introduce new forms; they create a way to draw RED ARROWS from the grid to the addendum that deals with the adjustment. An UW would still miss it though.

 

[Lee Lansford]

How do you make an adjustment for age in a situation where no similar comparables exist, forcing the use of comparables with 20 or more years differance in age? I stated in my report that an age adjustment lacked support for this property, the reviewer did not agree and stated that a field reviewer was able to make an age adjustment.

I understand that for THIS particular assignment you could not find data to support an "age" adjustment, but have you experienced similar assignments where you could identify an adjustment for "age"? If "yes", you may have your answer.

 

[Don Clark]

How do you make an adjustment for age in a situation where no similar comparables exist, forcing the use of comparables with 20 or more years differance in age? I stated in my report that an age adjustment lacked support for this property, the reviewer did not agree and stated that a field reviewer was able to make an age adjustment.

Any adjustment, positive or negative should come from and be based on market reaction. What would you like to bet that the reviewers did not?

Ask to see a copy of the reviewers adjustments for age and ask how the reviewer determined the amount ..."cause I would really like for this to be a learning experience" or some other such statement.

 

[Fred]

I stated in my report that an age adjustment lacked support

This may be a new wrinkle and not further the discussion. But I have never bought into the argument that the appraiser didn't make an adjustment. The adjustments was zero.

Any adjustment, positive or negative should come from and be based on market reaction.

IF the market includes the differential prices. Sometimes, it doesn't. You can't adjust for a reaction that isn't there.

 

[Doug Wegener]

Go back in time first to support an adjustment.

If that doesnt work, expand your area.

 

[Mike Garrett RAA]

I have found over the years it is sometimes more practical to do a condition adjustment rather than an age adjustment.

If the situation is that the comparables are considerably newer, say, 20 years of more you might decide to extract the adjustment from comparables. Lets say you compare two sales where there are several differences and an age difference of 10 years. After you have adjusted everything else you have a residual difference of $4,000 that could then be attributed to the age. $4,000 divided by 10 years would indicate an adjustment of $400 per year. After doing this enough times, appraisers develop a reasonable number to use for an age adjustment.

In my market there isn't a perceived adjustment by the market for less than 5 years. After 5 years, in median priced tract built housing, I am able to support $500 per year for an age adjustment. This can and will very considerably based on climate and quality of construction in other parts of the country. The real key is to use homes of similar age so that an adjustment is not necessary.

Condition adjustments are typically more subjective. The use of a condition adjustment that tends to increase the indicated value of the subject property is subject to scrutiny from reviewers and underwriters. These are often used to inflate the value of the subject. Funny thing is, when it goes the other way, no one objects.

 

[PropertyEconomics]

This may be a new wrinkle and not further the discussion. But I have never bought into the argument that the appraiser didn't make an adjustment. The adjustments was zero.

IF the market includes the differential prices. Sometimes, it doesn't. You can't adjust for a reaction that isn't there.

Steven you contradict yourself ... IF there is no market reaction or the market doesnt make any differential in pricing... the adjustment is ZERO .. isnt that what your first statement above means?????